Yahoo article29 Oct 2016 20:18
Relevant bit off the link
With a market cap of just £600m, Equiniti Group (LSE: EQN) appears to be a relatively small company, yet a closer look reveals that it's actually one of the UK's largest outsourcing firms, with 3,500 employees across 28 locations and revenue of £369m last year.
Equiniti provides technology to a broad range of financial services companies and i s the UK's leading provider of share registration and associated investor services. The company also has market leading positions in administration of employee share plans, pensions administration and software, and employee benefit schemes.
It's been a volatile year for Equiniti shares, with the company listing on the London Stock Exchange just under a year ago, and suffering an 8.5% fall on its first day of trading as well as heavy falls in February and June. Yet the volatility hasn't put Neil Woodford off, with the fund manager recently participating in a placing of the company's shares that allowed him to almost double his position in it. Woodford obviously sees something he likes in Equiniti.
City analysts forecast revenue of £391m for FY2016, an increase of 6% on last year, and adjusted earnings per share (EPS) of 15p. That puts Equiniti on an undemanding forward looking P/E ratio of 13.3 times earnings, which combined with a forecast dividend yield of 2.5%, looks quite attractive in my opinion.
With only 40% of existing customers taking a full complement of products, there's opportunity for the firm to grow through more deeply penetrating existing clients. Management believes the group can deliver mid-single-digit organic revenue growth within the 3%-7% range per annum with higher EPS growth driven by margin improvement and use of cash.
With good earnings visibility from contracted and recurring revenue streams and high levels of free cash flow, Equiniti certainly looks to have a lot of potential.
Sign In
Follow the stocks
